Business, economy shrinks, us economy, us economy growth, us economy slow down -

US Economy Shrinks More Than Expected in First Quarter, But Appears to Be Back on Track

Business, economy shrinks, us economy, us economy growth, us economy slow down -

US Economy Shrinks More Than Expected in First Quarter, But Appears to Be Back on Track

us-economy It turns out the pothole the U.S. economy hit in the first quarter was more like a crater.

An updated estimate by the Commerce Department showed gross domestic product deteriorated at an annual rate of 2.9 percent in the first three months of 2014, a stark revision that forced economists to downgrade their forecasts of how much the world’s largest economy will grow this year.

The United States survived the setback, which most economists agree was the result of an abnormally severe winter that reached into Southern states ill-equipped to deal with onslaughts of ice and snow.

More recent evidence shows the economy is back on track: Hiring, retail sales, new-home construction and consumer confidence all rebounded smartly this spring.

A separate government report Wednesday showed inventories for nondefense durable goods jumped 1 percent in May after a 0.4 percent increase the previous month. The first-quarter reading still stings.

The Commerce Department initially reported the GDP growth simply stalled. A second estimate said GDP shrunk at an annual rate of 1 percent, the first contraction since the first quarter of 2011. The final reading shows the U.S. endured its biggest economic collapse since the Great Recession in 2009. America’s economy expanded at annual rates of 4.1 percent in the third quarter of 2013 and 2.6 percent in the fourth.

Wall Street analysts had predicted the first-quarter estimate would be revised lower, but only to a contraction of 1.8 percent. Equity markets rose, evidence that traders are more focused on signs of future growth. Some also could be betting that a deeper-than-realized hole at the start of the year will cause the Federal Reserve to leave its benchmark interest rate at zero for longer than it had previously planned.

The U.S. economy now is growing again. Economists at National Bank Financial, PNC Financial Services, and Deutsche Bank, among others, say GDP likely grew at an annual rate of 4 percent in the second quarter.

State and local governments in the U.S. are starting to spend again, removing a drag on the economy. Steady hiring should buoy household spending, and a stronger global growth should bolster exports.


Leave a comment

Related Posts

Say No Mo', Where Is Video?: The Assassination of E.J. Bradford
1: to murder (a usually prominent person) by sudden or secret attack often for political reasons; a plot to assassina...
Read More
Bus Crash Horror: 1 child dead and 40 people hurt on youth football trip
BENTON, Ark. (AP) — A charter bus carrying a youth football team from Tennessee crashed early Monday in central Arkan...
Read More
Black Hair Matters: The Affirmative Power of Politicians Like Ayanna Pressley and Stacey Abrams
When Ayanna Pressley got her Senegalese twists done for the first time about three years ago, it was a moment of affi...
Read More
Freshen Up Your Board Game Collection With This One-Day Amazon Sale
It’s not quite as jam-packed as Amazon’s Black Friday board game sale, but their 12 Days of Deals strategy game sale ...
Read More